Auditing with well Annalised Questions And Answers
A+PLUS GRADED…….
1. General Standards: Qualifications of the auditor and quality of his work
Competence, Independence, Due Professional Care
2. Competence: adequate technical training,
reliable and relevant
3. Field Work Standards: basis to judge the fairness of financial statements Planning
and supervision, internal control structure, evidence
4. Evidence: must be sufficient and competent, and obtained through inspection, observations, inquiries, con- firmations
5. Reporting Standards: provide guidance and structure for communicating the result of audit financial
statements, GAAP, Informative Disclosures, Expression of an opinion
6. Audit Process: Planning and Supervision, Review of Internal Control Structure, Performance of Substantive Tests, Audit
report
7. Planning and Supervision: Understanding of; (nature of business and industry, accounting proce- dures,
internal control system) Methods used to process info, assess audit risk, make estimates of materiality levels, perform analytic
procedures to focus, consider special issues
8. Internal Control System: control environment, risk assessment, control activities, information and
communication, and monitoring
9. audit risk: the risk that the auditor may unknowingly fail to appropriately modify his or her opinion on financial statements that
are materially misstated
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, 10. materiality: the magnitude of an omission or misstatement of accounting information that, in light of surrounding
circumstances, makes it probable that the judgment of a reasonable person relying on the information would have been changed or
influenced
11. fraud: Intentional misstatement of financial statements by management (management fraud), or theft of assets by employees
(employee fraud). Fraud also is referred to as irregularities.
12. assertion: A representation or declaration made by the responsible party, typically management of the entity.
13. Information Risk: The risk that the information used by investors, creditors, and others to assess business risk is not
accurate.
14. Adverse Opinion: An opinion issued by the auditors that the financial statements they have audited do not present
fairly the financial position, results of operation, or cash flows in conformity with accounting principles generally accepted in the
United States of America.
15. Consistency: The concept of using the same accounting principles from year to year so that the successive financial
statements issued by a business entity will be comparable.
16. Independence: A most important auditing standard, which prohibits CPAs from expressing an opinion on financial
statements of an enterprise unless they are independent with respect to such enterprise; independence is impaired by a direct
financial interest, service as an officer or trustee, certain loans to or from the enterprise, and various other relationships.
17. Internal Control: A process, effected by the entity's board of directors, management, and other personnel, designed to
provide reasonable assurance regarding the achievement of objectives in the following categories: (1) reliability of financial
reporting; (2) effectiveness and efficiency of operations; and (3) compliance with applicable
laws and regulations.
18. Qualified Opinion: The appropriate form of audit report when there is a limitation in the scope of the audit or
when the financial statements depart from GAAP significantly enough to require mention in the auditors' report, but not so
significantly as to necessitate disclaiming an opinion or expressing an adverse opinion.
19. Unqualified Opinion: The form of audit report issued when the examination was adequate in scope and the
auditors believe that the financial statements present fairly the financial position, operating results, and cash flows in conformity with
generally accepted accounting principles.
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A+PLUS GRADED…….
1. General Standards: Qualifications of the auditor and quality of his work
Competence, Independence, Due Professional Care
2. Competence: adequate technical training,
reliable and relevant
3. Field Work Standards: basis to judge the fairness of financial statements Planning
and supervision, internal control structure, evidence
4. Evidence: must be sufficient and competent, and obtained through inspection, observations, inquiries, con- firmations
5. Reporting Standards: provide guidance and structure for communicating the result of audit financial
statements, GAAP, Informative Disclosures, Expression of an opinion
6. Audit Process: Planning and Supervision, Review of Internal Control Structure, Performance of Substantive Tests, Audit
report
7. Planning and Supervision: Understanding of; (nature of business and industry, accounting proce- dures,
internal control system) Methods used to process info, assess audit risk, make estimates of materiality levels, perform analytic
procedures to focus, consider special issues
8. Internal Control System: control environment, risk assessment, control activities, information and
communication, and monitoring
9. audit risk: the risk that the auditor may unknowingly fail to appropriately modify his or her opinion on financial statements that
are materially misstated
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, 10. materiality: the magnitude of an omission or misstatement of accounting information that, in light of surrounding
circumstances, makes it probable that the judgment of a reasonable person relying on the information would have been changed or
influenced
11. fraud: Intentional misstatement of financial statements by management (management fraud), or theft of assets by employees
(employee fraud). Fraud also is referred to as irregularities.
12. assertion: A representation or declaration made by the responsible party, typically management of the entity.
13. Information Risk: The risk that the information used by investors, creditors, and others to assess business risk is not
accurate.
14. Adverse Opinion: An opinion issued by the auditors that the financial statements they have audited do not present
fairly the financial position, results of operation, or cash flows in conformity with accounting principles generally accepted in the
United States of America.
15. Consistency: The concept of using the same accounting principles from year to year so that the successive financial
statements issued by a business entity will be comparable.
16. Independence: A most important auditing standard, which prohibits CPAs from expressing an opinion on financial
statements of an enterprise unless they are independent with respect to such enterprise; independence is impaired by a direct
financial interest, service as an officer or trustee, certain loans to or from the enterprise, and various other relationships.
17. Internal Control: A process, effected by the entity's board of directors, management, and other personnel, designed to
provide reasonable assurance regarding the achievement of objectives in the following categories: (1) reliability of financial
reporting; (2) effectiveness and efficiency of operations; and (3) compliance with applicable
laws and regulations.
18. Qualified Opinion: The appropriate form of audit report when there is a limitation in the scope of the audit or
when the financial statements depart from GAAP significantly enough to require mention in the auditors' report, but not so
significantly as to necessitate disclaiming an opinion or expressing an adverse opinion.
19. Unqualified Opinion: The form of audit report issued when the examination was adequate in scope and the
auditors believe that the financial statements present fairly the financial position, operating results, and cash flows in conformity with
generally accepted accounting principles.
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